Suez Canal/supply chains: stuck ship sinks trade flows

{"text":[[{"start":12.67,"text":"Taiwan’s Ever Given container ship has made history by running aground and blocking the Suez Canal. "},{"start":18.287,"text":"The waterway has closed only five times since it opened 151 years ago. "},{"start":22.979,"text":"A stranded vessel longer than the canal is wide has wedged a stopper in the fastest seaborne trade route between Europe and Asia. "},{"start":29.522,"text":"That will be a blow to just-in-time supply chains. "}],[{"start":33.33,"text":"The blockage may look like a bizarre one-off, but think again. "},{"start":37.122,"text":"Decades of pared-down trade delivery times and costs mean vessels keep getting bigger. "},{"start":41.739,"text":"The Ever Given may hold more than 20,000 containers (twenty-foot equivalent units), but there are even larger ships due for delivery from 2023. "},{"start":49.782,"text":"Depending on how low these sit in the water, there is a chance that they could get stuck in the Suez too. "}],[{"start":55.2,"text":"About 50 ships pass through the Suez every day. "},{"start":58.467000000000006,"text":"Half are container vessels. "},{"start":60.284000000000006,"text":"The block will raise costs and delay deliveries. "},{"start":63.06400000000001,"text":"The alternative southern route, around the Cape of Good Hope in South Africa, adds days on the water. "},{"start":68.419,"text":"Delays could run from an extra nine days for a container vessel to double that for an oil tanker, estimate experts VesselsValue. "},{"start":75.162,"text":"That could cost more than $427,000 for the average container vessel’s journey. "}],[{"start":null,"text":"

"}],[{"start":80.62,"text":"Alternatives to seaborne transport for intercontinental journeys are limited. "},{"start":84.849,"text":"Air freight provides a route but the cost is much higher per kilogramme. "},{"start":88.492,"text":"Only high-value items, or very urgent deliveries, are worth sending at the cost of $2 to $3 per kilogramme, points out Berenberg. "},{"start":96.72200000000001,"text":"A container ship costs just 4 cents. "},{"start":99.26400000000001,"text":"Both have risen above historical averages, particularly containers. "},{"start":103.20700000000001,"text":"Short term rates between China and Europe have quintupled in a year. "}],[{"start":107.98,"text":"Share prices of both Evergreen and Maersk, two of the world’s biggest shippers, have soared. "},{"start":113.434,"text":"Even so, their earning valuation multiples have collapsed. "},{"start":117.00200000000001,"text":"Markets seem to believe freight rates will fall back later this year. "}],[{"start":121.54,"text":"No matter. "},{"start":122.83200000000001,"text":"With so many supply chain glitches occurring for everything from automotive chips to medical supplies, expect companies to order more in a bid to ensure inventory cushions. "},{"start":131.687,"text":"The Suez Canal gridlock is not the only reason supply chains will stretch. "}],[{"start":136.76000000000002,"text":"If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT”, which appears at the top of this page above the headline. "}],[{"start":145.29000000000002,"text":""}]],"url":"https://creatives.ftacademy.cn/album/36286-1616611731.mp3"}